President Barack Obama said new safeguards would be put in place to avoid a repeat of the Thursday's trading "glitch" that sparked panic on Wall Street.

During a feverish trading session, with investors already spooked by the Greek debt crisis, the Dow Jones industrial average suddenly plunged to its biggest intraday loss ever.

At 2.42pm, the Dow had been 250 points down, but five minutes later had fallen to a deficit of almost 1,000 points. For a brief while, Accenture, which had been worth $40 a share, dropped to a penny. Procter & Gamble, the household goods company and one of the least volatile stocks on the Dow, dropped 35%.

After another 10 minutes had passed, the market recovered 500 points.

Obama said: "The regulatory authorities are evaluating this closely with a concern for protecting investors and preventing this from happening again and they will make findings of their review public along with recommendations for appropriate action," he said.

The securities and exchange commission said it was working with other regulators to review what it described as "unusual trading activity" and declined to comment further. One source said authorities were examining whether it had been a "fat finger" trade, a hugely costly mistake, or whether there had been any malicious intent at work.

Rumours were flying , with CNBC in the United States reporting that Citigroup had been responsible for what it described as a "massive trading error", an allegation later denied by the bank. Numerous reports suggested that a trader had entered "billion" into a deal when they meant "million". Others pinned the blame on trading firms that use high speed computer programmes to trade, for the rapid pace of the market's decline. Trades made at irregular prices will be cancelled.

The Dow clawed back most of its losses and ended the session down 347 points, a 3.2% decline.